The Egypt Financial Regulatory Authority has issued new rules setting investment ratios, limits and governance requirements for insurance and reinsurance companies’ funds, including takaful and other specialised insurers under the Unified Insurance Law. The framework introduces minimum allocations to open-ended investment funds that invest in shares listed on Egyptian exchanges, caps exposures to commodity and real estate funds, and establishes first-time requirements for investing assets linked to unit-linked policies and capital formation contracts. For shareholders’ “free funds”, insurers must allocate at least 5% to open-ended equity funds investing in Egyptian-listed shares, with the authority able to approve counting direct listed equity holdings toward that threshold. For “allocated funds” backing policyholder obligations, the rules require investment in such funds equal to at least 2.5% of paid-up capital, and cap the combined exposure to shares and open-ended equity funds at 30% of total funds required to be allocated. Across both free and allocated funds, investment in any single fund is limited to the lower of 5% of the insurer’s paid-up capital and 15% of the fund’s net asset value. The decision also allows up to 5% of invested funds to be placed in commodity and metals funds or metal-backed instruments traded on the Egyptian Exchange, and limits investment in real estate investment funds to 10% of invested funds for life insurers and 5% for property and liability insurers, with a per-fund cap and an exemption for real estate funds established with insurer participation. New safeguards for unit-linked and capital formation products include mandatory segregation of related assets into separate accounts supported by an electronic system, maintenance of a dedicated investment register, caps on fees and charges to amounts approved in the relevant policy or contract, periodic publication (at least monthly) of returns and unit prices for unit-linked portfolios, and client suitability assessments with at least annual reassessment. Transitional provisions allow pre-existing positions above maximum limits to remain, but not to be exceeded from the day after the decision enters into force, while firms must meet the new minimum allocation requirements within six months of entry into force.
Egypt Financial Regulatory Authority 2025-02-10
Egypt Financial Regulatory Authority sets new investment allocation and governance rules for insurers including mandatory holdings in Egyptian-listed equity funds and new unit-linked safeguards
The Egypt Financial Regulatory Authority has introduced new rules for insurance and reinsurance companies under the Unified Insurance Law, setting investment ratios, limits, and governance requirements. Key measures include minimum allocations to open-ended equity funds, caps on commodity and real estate fund exposures, and new requirements for unit-linked policies and capital formation contracts. The framework also mandates asset segregation, investment registers, fee caps, and client suitability assessments for these products.